Colorado’s SB 26-074 Clarifies Mechanic’s Lien Rules for Construction Costs

Colorado’s updated mechanic’s lien law gives contractors clearer guidance on which contract-authorized costs may be included in payment claims, while clarifying protections against knowingly excessive claims. Senate Bill 26-074 was signed by Governor Jared Polis on April 6, 2026, and took effect on August 12, 2026.

The legislation addresses both private construction mechanic’s liens and claims connected to public construction projects. For property owners, developers and contractors, the changes highlight the importance of clear contracts, accurate cost records and careful handling of construction disputes.

Key Changes Under Senate Bill 26-074

Contract-authorized costs may be included

The law expressly allows mechanic’s liens and verified statements of claim on public construction projects to include costs permitted under the applicable contract. These may include expenses associated with:

• Construction delays
• Lost productivity
• Disruption to the work

The costs must be allowed under the contract and supported by the circumstances of the claim. The law does not automatically entitle contractors to recover every additional expense or guarantee that a disputed amount will be paid.

Clarification of excessive claims

SB 26-074 also clarifies the consequences for contractors who knowingly file an excessive mechanic’s lien or verified statement of claim.

For private construction, existing law provides that a contractor who knowingly claims an excessive lien amount can forfeit lien rights and become liable for costs and attorney fees. The new law aligns the treatment of public construction claims by clarifying that a contractor who knowingly submits an excessive verified statement of claim forfeits the rights associated with that claim.

The legislation also clarifies that a court’s decision to award less than the amount claimed does not, by itself, mean the original claim was excessive. This distinction matters when a claim includes disputed costs that a court ultimately evaluates differently.

What Homeowners and Property Buyers Should Know

Homeowners undertaking renovations or new construction should understand how their contracts address delays, changes in project scope, productivity losses and work disruptions. These provisions may affect the amount a contractor seeks to recover if a payment dispute develops.

Buyers purchasing properties with recent or ongoing construction should also pay attention to unresolved contractor payments and recorded liens. A lien dispute can complicate title review and closing, depending on the circumstances. Buyers should work with their title company and legal advisers to determine whether any claims need to be resolved before closing.

The law does not mean every construction dispute will produce a larger lien. Whether a particular cost can be included depends on the contract, applicable law and facts of the dispute.

Implications for Sellers, Investors and Developers

Property owners selling recently renovated or newly built properties may need to resolve outstanding contractor claims before a transaction can proceed smoothly. Keeping payment records, change orders, invoices and lien releases organized can help demonstrate which obligations have been satisfied.

For developers and real estate investors, the law reinforces the importance of assessing contract terms and potential construction-dispute exposure during project budgeting. Contractors, meanwhile, have clearer statutory language regarding contract-authorized delay and disruption costs, but they must still substantiate their claims and avoid knowingly excessive amounts.

Practical Takeaway

Colorado’s SB 26-074 clarifies how certain contract-authorized construction costs may be included in mechanic’s liens and public construction claims. It also explains how excessive claims are treated and confirms that a lower court award does not automatically make a claim excessive.

Before beginning a renovation or construction project, property owners and contractors should review payment terms and dispute provisions carefully. Maintaining accurate records and obtaining appropriate legal advice can help all parties understand their rights and obligations if a disagreement arises.

For the enacted legislation and its official summary, visit the Colorado General Assembly’s SB 26-074 page.